About Espipionage

With a last name like Ninja, I decided long ago to specialize in espionage. And with my first name being Forex, you guessed it, my other pasison was, well, anything and everything FX. Naturally, I decided to combine my two loves into one, "spying" on the forex industry (and telling you about my findings on this blog, Espipionage). This blog is dedicated to giving traders the inside scoop on developments in the forex industry, such as changing broker regulations, new currency trading products and companies. I also profile existing companies that are making an impact on retail forex traders, all for your benefit. Set your night vision goggles ON. It's Spy Time!

Protect Yourself from Forex Fraud

Let’s face it, people: forex fraud exists and unfortunately, there are many people who fall victim to it every single day.

Thankfully, the Commodity Futures Trading Commission (CFTC), a.k.a. Mr. Big Brother, is there to give a helping hand. In fact, one of the reasons why I love the CFTC website so much is because it has a nifty Consumer Protection section, which is dedicated to help the Average Joe protect himself from forex fraud and scammers.

The CFTC even points out some red flags that may tip you off on a potential scam:

Promises of high profits and small risks
Who are they kidding? Remember, if there is one sure thing about the forex market, it’s that there are NO sure things. There are risks involved in all aspects of forex trading. So when someone comes up to you guaranteeing large returns with small risks, save yourself the trouble and just walk away.

Unsolicited offers
Unsolicited offers come and go and not only are they annoying, but they can also be extremely dangerous. Do not be tempted when someone comes up to you with an investment opportunity of a lifetime. If it sounds too good to be true, it probably is.

If someone asks you to send money right away
Would you send someone you didn’t know money if they asked you to? Didn’t think so. Be wary of people who ask for an initial investment and ask you to send money as soon as possible. Remember, once your money has left your hands, it may be impossible for you to get it back.

What can you do to protect yourself?

First and foremost, do your own research. Regulatory agencies such as the CFTC and the NFA can only do so much to protect consumers from fraud, which means that your protection is ultimately your responsibility – you need to do your part as well!

A good place to start would be to look at the company’s background and track record. You can also drop by blogs and forums to see what other traders have to say about a particular forex broker, and if you see a bunch of negative reviews here and there then that should be a warning sign!

Big Pippin usually likes to say “When in doubt, get out!” But if you’d like to make a more informed decision, you can check with your lawyer, accountant, or with a CFTC-accredited adviser.

Also, remember to ALWAYS get everything in writing. Your detailed records could come in handy some day! You never know when you’ll need evidence to support your case.

What should you do if you think you’ve been scammed?

But what should you do if you suspect that you’ve already fallen victim to fraudulent practices? The proper course of action is to approach the proper authorities and/or regulatory agencies.

If your complaint involves a firm or professional who is registered with the CFTC, you can take the matter up with the CFTC itself. On the CFTC’s Reparations Program page, you’ll find everything you need to know to file complaints and settle disputes with your CFTC-registered broker.

If, however, your broker isn’t U.S.-based, it may fall under the jurisdiction of a different regulatory agency. You can find a list of foreign trading authorities in our lesson on foreign regulatory agencies.

These institutions exist to prevent abuse in the markets and protect the average joe, like you and I, from fraudulent practices; don’t be afraid to get in touch with them if you think you’ve been cheated. Keep in mind that by reporting fraud, you also help prevent such cases in the future!

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